Is this tax fraud, and just who committed it?

In My Humble Opinion
1

I went to Catholic grade school in the 60s and early 70s. About 4th or 5th grade, there was a tuition crisis (probably about 1968) and the cost to parents was going to nearly triple for some reason that was not very clear to me.

But what was clear was the scheme the Diocese came up with in order to help the parents afford to keep their kids in Catholic school. Here’s how it went, IIRC… tuition was eliminated, and a kind of “contributing membership” category was created within each parish. My parents were to “donate” x dollars per week per child (in our case, 3 childrren) into the church collection baskets. The donation would be in a sealed envelop, with our parents names on it. In exchange, parents could send their children to the local parish school for “free”, so long as they remained in good standing financially. If they fell too far behind in their payments, their “right” to a “free Catholic education” in the parish would be revoked. And their “contributions” to the church would be tax deductible, thus easing the crunch of the tuition crisis.

I didn’t question this as a kid, but as an adult I’ve gotten a bit more outraged as each year went by. Both my parents are dead now, so at least any lurking IRS folk can’t go after them, because it seems to me the Catholic churched planned and assisted hundreds or thousands of parents to commit tax fraud. I know this policy was in force in my local diocese, I don’t know whether it was any more widespread. And for all I know, it may be going on to this day.

Maybe some smart tax lawyer or accountant will tell me I’m wrong, but here’s why I think the church was comfortable with the scheme, and why it worked (as far as I know, the IRS never questioned these “donations” on my parents’ returns or any other local parents). Basically, it was the parishioners rather than the church taking any risks of making false claims to the IRS, the church was just getting cash money. At the same time, the church functioned as a shield against investigation of the complete pcture. An investigation of the parents would basically end at the church entrance. The IRS would basically have to challenge the tax exempt status of the whole American Caholic church to get access to sufficient church records to uncover the detailed accounting and the direct link between these “contributions” and their children’s private education costs.

Am I misperceiving this? Is there some more benign interpretation to be applied to what was going on?

2

I’ve heard of two different plans similar to this- when I was a child in Catholic school (in the early 70’s) ,each family had to make a minimum church contribution per week ($1 per adult, .25 per child),although there was still tuition. In my kids’ school, there are two clearly published tuition rates, one for active parish members and one for non-members. A certain level of financial suppport to the church ( among other things) is required for active parish membership. There are a few differences between these plans and the one you described- the schools I know still charged tuition, although I suppose in the first case tuition might have been raised if there weren’t enough contributions for the parish to continue to subsidize the school . And in both cases, the pastors reduced or eliminated required contributions and tuition for those who couldn’t afford it . Are you certain your parents made the contribution instead of, not in addition to tuition?
BTW, the numbers for my kids school are $3500 tuition for 2 kids at the parish member rate,the cost of education is $3000 per child, and the non-parish rate is $3000 per child. The $2500 difference (and the more children in the family, the bigger the difference) is clearly not being made up by my $370 required contribution alone. I am donating money to the church, which in turn subsidizes the school,and the CCD program and the Scouts and the sports teams etc. They are not simply taking my donation and sending it to the organizations that I benefit from.